A proposal to extend Victoria’s energy efficiency program could deliver up to $3 billion in savings to the state’s ­consumers and businesses but would also rip hundreds of millions of dollars of earnings from power generators, a state government analysis has revealed.

The proposal, put forward by the state’s Department of Primary Industry, would double the annual carbon savings target for Victoria’s Energy Saver Initiative to 5.4 million tonnes for three years.

Under the initiative, which is similar to other so-called white certificate schemes operating in South Australia and NSW, retailers are required to help residential customers cut their energy use through measures such as providing energy-efficient light bulbs and water heaters. It has been in operation since 2009.

In a regulatory impact statement released for consultation as part of a Victorian government review of the scheme, the department says the 5.4 million tonne annual target is its preferred option.

That level of abatement would deliver savings worth up to $2.8 billion in today’s dollars from 2012, when the target would kick in, through to 2021. That figure is boosted by the department’s preference to have the scheme extended to business customers.

It equates to a $308 saving in annual electricity bills per household in the first five years of the scheme.

Customers would have to foot a bill of about $86.6 million to achieve the savings but their anticipated drop in demand for power would strip up to $907 million from the profits of power generators.

The modelling assumes the start in 2012 of a federal carbon pollution reduction scheme aimed at cutting emissions by 5 per cent.

Related Quotes

Company Profile

The department conceded that the available data did not allow it to determine whether the scheme had had any impact on energy usage in 2009.

Under Victorian legislation, Energy Minister
Michael O’Brien
has until the end of May to set the new target.

In a letter to stakeholders, Mr O’Brien said the government was committed to ­providing an “affordable, reliable, ­sustainable energy supply, and working to ease the cost of living pressures faced by households and small business".

He cautioned that the regulatory impact statement was begun under the previous Labor government and therefore did “not necessarily reflect the policies and views of the current government".

Greens Victorian Leader
Greg Barber
said the government should consider an even bigger target.

“The bigger the target the more we save and the only losers are the power companies," he said. “We would say don’t just double it, triple it."

Energy Retailers Association of Australia executive director Cameron O’Reilly said the Victorian model was the best of the three state schemes in Australia but all imposed a cost on the industry.

“It just adds to the plethora of . . . environmental schemes, feed-in tariffs [and] renewable targets that are ­costing the community quite a bit for what seems to be relatively marginal improvements in energy efficiency and carbon abatement," he said.

He said a single, national scheme would be better for the industry.

“We are aware of it, we are stuck with it, we believe a national scheme, if done appropriately, would be an improvement," he said.

The federal government investigated a national scheme last year and is expected to present its view this year. But the federal Treasury has warned that a national scheme could actually lift electricity prices and result in limited carbon abatement.